Knott v. Woodstock Farm & Fleet, Inc.
73 N.E.3d 578
Ill. App. Ct.2017Background
- On April 7, 2013, Knott was injured at Blain’s Farm & Fleet; he later sued in McHenry County (premises liability, negligence, spoliation; > $50,000 per count).
- Knott and his wife filed chapter 7 bankruptcy on July 8, 2013; original Schedule B listed no “other contingent and unliquidated claims.”
- Trustee reported no nonexempt property for distribution; Knott filed amended Schedules B and C on October 29, 2013, listing a “possible claim versus” (personal bodily injury) and exempting $15,000 under 735 ILCS 5/12-1001(h)(4).
- Knott received a bankruptcy discharge on January 7, 2014, and filed the state-court complaint on June 11, 2014. His counsel had earlier notified defendant in November 2013 and asked preservation of evidence.
- Defendant moved for summary judgment arguing judicial estoppel (and alternatively lack of standing), contending Knott failed to fully disclose the claim to the bankruptcy court; the trial court granted summary judgment based solely on judicial estoppel.
- The appellate court reversed, holding Knott’s bankruptcy disclosure was not a clear and convincing factual inconsistency and that intent to deceive could not be presumed; it also held Knott retained standing as to the exempted amount and possible surplus.
Issues
| Issue | Knott's Argument | Woodstock Farm & Fleet's Argument | Held |
|---|---|---|---|
| Whether judicial estoppel bars Knott’s suit because of his bankruptcy disclosures | Knott said he disclosed a “possible claim” and did not intentionally conceal; any omission was inadvertent | Disclosure was incomplete; failure to fully disclose shows intent to deceive and justifies estoppel | Reversed: disclosures were not factually inconsistent by clear and convincing evidence; estoppel inappropriate |
| Whether intent to deceive may be inferred from incomplete bankruptcy disclosure | Knott argued intent cannot be presumed and cited Seymour rejecting presumption from nondisclosure | Defendant argued duty to fully disclose means failure supports an intent inference | Court held intent to deceive cannot be presumed from incomplete disclosure here (relying on Seymour) |
| Whether Knott lacked standing because the cause of action belonged to the bankruptcy estate | Knott argued he had a pecuniary interest: he exempted $15,000 and the estate showed possible surplus, so he retained standing | Defendant argued unliquidated claims became estate property and only trustee may sue | Court held Knott has standing as to exempt portion and potential surplus (trustee also has standing) |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (2001) (explains purpose of judicial estoppel: prevent deliberate position-shifting)
- Seymour v. Collins, 2015 IL 118432 (Ill.) (Illinois framework for applying judicial estoppel and caution against presuming intent to deceive)
- Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. General Motors Corp., 337 F.3d 314 (3d Cir.) (example of estoppel where disclosure did not inform bankruptcy court of nature/status of litigation)
- Adams v. Northern Illinois Gas Co., 211 Ill.2d 32 (Ill.) (summary judgment standards and construing evidence in favor of nonmovant)
- In re Andreuccetti, 975 F.2d 413 (7th Cir.) (debtor has standing if reasonable possibility of surplus exists)
- In re Polis, 217 F.3d 899 (7th Cir.) (debtor retains interest in exempt portion of claim and thus standing)